Providing useful insights and making the complex world of energy more accessible, from an experienced industry professional. A service of GSW Strategy Group, LLC.

Tuesday, January 25, 2005

More Orphans
Last spring I wrote about the problems GM was having as the leases on its electric car, the EV-1, were running out and it was taking back the cars to scrap them (see posting of 3/29/04.) EV-1 lessees were not happy with this, preferring in many cases to keep the cars longer. Ford has encountered similar problems with its electric Ranger EV pickups, but it appears to have resolved matters more positively, now allowing lessees to purchase the vehicles.

The actual number of vehicles involved is tiny, only a few thousand, but this decision has much larger implications. All the big carmakers have advanced vehicle programs underway, involving hybrids, fuel cells, hydrogen internal combustion engines, or other technologies. Not all will pan out, but in order to avoid having that become a self-fulfilling prophesy, the auto companies must create a high level of trust that anyone who buys one of these cars will be treated fairly down the road, even if it turns out to be an "orphan."

It's also important to recognize that the bar for this is now much higher than in the past. Someone buying a 1959 Edsel would at least have been able to find mechanics who could fix it when it broke down; that might not be the case if BMW decided to stop servicing the hydrogen 745h, for example. Few consumers will buy a car they don't think will be supported, and the carmakers will only be able to recoup their enormous investments in their advanced technology vehicle programs if they turn out mass-market models at some point.

This creates a host of practical problems and could make the rollout of a totally new technology car even more expensive than it already is, by requiring a larger parts inventory than "just in time" programs would suggest, but it is all part of the price of entry and an investment in future success.